Lloyds Banking Group is cutting 3,000 jobs and shutting 200 branches as the lender braces itself for a cut in interest rates following Britain’s decision to quit the European Union.
The part state-backed bank said a cost-cutting programme announced in 2014 will be extended and the “expected lower for longer interest rate environment” will see the new cuts come into effect by the end of 2017.
The Bank of England is widely expected to cut interest rates from 0.5% to 0.25% next week as the fallout from the Brexit vote intensifies.
Lloyds is targeting £1.4 billion in cost savings by the end of next year.
The total number of jobs cut since the announcement of an efficiency drive in 2014 will stand at 12,000 by the end of next year. The latest 200 branch closures come on top of another 200 already earmarked for closure at Lloyds, which is 9% owned by the British Government.
The bank made the announcement alongside results for the first half of the year, which saw statutory profits more than double to £2.5 billion, but the lender warned that Brexit could have an adverse impact on its future performance.
“Given the uncertainty, it is too early to determine the impact on our formal longer term guidance at this stage. However, while the business will remain highly capital generative, it is possible that this capital generation may be somewhat lower in future years than previously guided,” the bank said.
Chief executive Antonio Horta-Osorio added that, following the referendum, the outlook for the UK economy is “uncertain” and a “deceleration of growth seems likely”.
“The UK, however, enters this period of uncertainty from a position of strength, following continued private sector deleveraging, significantly improved mortgage affordability and low levels of unemployment,” he said.
Unions reacted with fury.
Rob MacGregor, national officer at Unite, warned against “cutting too far too fast” and said that the union would do everything in its power to oppose the cuts.
TUC general secretary Frances O’Grady urged the Government to act now to secure jobs and investment before “thousands of working people pay the price of Brexit with the loss of their job”.